Free legal contracts are widely available online and using them may seem like the perfect way to save money while protecting your business. However, free legal contracts can end up costing you
more while not protecting your business as you had hoped. Here are a few reasons why you should not use free legal contracts…
1.Choosing the wrong contract
Free legal contracts are available for you to use at your discretion. Most people will select one based on the title, but this may result in different consequence than intended. This means that your small business may not have the protection that you think it does. Each contract has important differences and determining which one is best suited for your particular situation should be discussed with a small business lawyer.
2.Poor drafting and lack of enforceability
You do not necessarily know who has written these free contracts, it could be a lawyer or anyone else for that matter. It may seem like a well drafted and enforceable contract on the face of it, however, you may not discover the problems and loopholes in it until you are in court.
In addition to loopholes and problems, the contract itself may not be enforceable, dependent on the particular wording used such as what jurisdiction the contract has elected.
3.Litigate or arbitrate?
Again, because these free contracts could have been drafted by anyone, they may not include specific provisions dealing with arbitration options compared to litigation. Arbitration is often the preferred approach because it is cheaper and not as time-consuming as litigation.
4.Lack of communication
Free legal contracts remove the communication aspect and operate as a ‘one size fits all’, but every situation is different.
Related to choosing the correct contract and enforceability is jurisdiction. Laws may differ from province to province so your contract will need to cover the applicable laws and regulations in the jurisdiction that the arrangement is made for. This again relates to choosing the right contract and enforceability.
It may seem like using free legal contracts is the easiest, fastest, and cheapest way to protect yourself and your business. However, these contracts are not drafted with your needs in mind. Learning about the flaws in the contract when it is too late may result in increased costs compared to working with a small business lawyer to begin with.
If you are looking to draft contracts or have any other small business questions or concerns, you can leave a comment below or call in to book a consultation.